Data Analytics

NASCIO 2021: Georgia Sought Identity Verification Solution to Stop Fraud

The state was able to stop an estimated $10 billion in bogus unemployment claims during the pandemic.

Mickey McCarter is the senior editor of StateTech Magazine.

Jeff May, CIO of Georgia’s Department of Labor, faced a perfect storm when the pandemic hit.

Georgia was enjoying a low unemployment rate of 3.6 percent, but when the world shut down in March 2020, that unemployment rate would spike to 13.7 percent, May said. Not only was the Georgia Department of Labor slammed with employment claims but it lacked staff and funding to process those claims in a manner that verified their authenticity.

In a short time, Georgia received 5 million unemployment claims, which was suspicious for a state that only has about 10.5 million people. In its busiest week, the state Department of Labor processed 390,000 claims, up from an average of 5,000 claims, according to May’s NASCIO presentation. “You cannot scale for that,” May said.

The pandemic had brought together the elements for the storm, May explained Tuesday during a panel of the annual conference of the National Association of State Chief Information Officers. A period of record low unemployment had left the agency underfunded, and the wave of new claims left an influx of data vulnerable to identity theft.

“Bad actors just needed an opportunity,” May said. “They got the opportunity and they took advantage — not just in Georgia but in states across the country.”

Personal Information Authentication Defeated Bad Actors

Equipped with identity information from cybersecurity breaches such as the 2017 Equifax data breach, criminals could locate Georgia residents and attempt to make fake claims in their names. The state sought assistance in identity verification and ultimately paid $23 billion in benefits to 1.5 million families, May said.

Over the course of 15 months, the Georgia Department of Labor paid as much in benefits as it had in the previous 80 years combined. “We had more work than we ever had to do, and it had to be done yesterday,” May said.

In about a week, the agency had implemented a technology solution, but the amount of data to process was still overwhelming. “The technology part is always the easy part. The people part takes a while,” May said. Congress and the state legislature, meanwhile, continued to press the agency to make claim payments.

After Georgia implemented identity verification measures, one third of rejected claimants immediately abandoned their claims, suggesting “absolute fraud,” May said.

“When they hit a roadblock in one place, they just moved on to the next one and then the next one,” May said of bad actors filing false claims with various states.

Ultimately, the state verified only 47 percent of applicants, May said. Through identity verification, Georgia prevented an estimated $10 billion in fraudulent payments.

Speaking on the same NASCIO 2021 panel, Georgia CTO Steve Nichols said bad actors will persist in trying to find ways to defeat identity verification systems.

“The fraudsters were continuing to up their game. It became “Spy vs. Spy.” They were coming up with new things and sharing information on the dark web on ways to defeat this,” Nichols said.

Check out more coverage from the NASCIO 2021 Annual Conference and follow us on Twitter at @StateTech, or the official conference Twitter account, @NASCIO, and join the conversation using the hashtag #NASCIO21.

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